You Rent From YouTube?

Oh Apple TV, will you ever cease to have new competitors arise to elbow into your already paltry market share? Internet video giant YouTube wants to be next in line. The company is in talks with Sony and other major studios about offering newer movies as streaming rentals on the site.

YouTube already offers many older shows and movies for free on the site, presumably because they’ve either become public domain properties, or because studios don’t think it’s worth protecting their rebroadcast rights.

According to the Wall Street Journal, if talks are successful, the list of movies available via YouTube could grow to include new and recent releases from Sony, Lions Gate, and Warner Bros. There’s even some discussion of making movies available as early as their official DVD/Blu-Ray release date.

Not all movies would necessarily carry a rental fee, according to the report. Depending on the studio and the film, some titles may be available free of charge, supported instead by advertising revenue. The going rate for other movies will likely be around $3.99 (for standard definition, according to NewTeeVee’s estimates), which is the cost of most new release iTunes movie rentals. Whether users could also optionally download movies from YouTube is another point up for discussion.

This should be setting off warning alarms at Apple, unless it already has a very impressive plan in place for the revamp and revitalization of Apple TV. iTunes movie rentals are great, so long as you have an HTPC or an Apple TV, but the minute you can get fresh, new content cheaply via YouTube, expect Apple TV’s growth potential to plummet. YouTube is available via many more internet connected AV devices than iTunes, and it’s a site that most internet users are likely already using and comfortable with.

Ultimately YouTube suffers in comparison to iTunes for a couple reasons. First, you probably won’t be able to download all titles with YouTube rentals, especially at launch. That frightens away potential customers who might not have the best internet connection available, and so avoid streaming content. Even computer power is an issue with streaming. My 12-inch Powerbook G4 can’t handle YouTube nearly as well as it can downloaded movie files.

You also won’t likely be able to take the file with you on portable devices, or at least not without incurring data fees. The beauty of iTunes is that your downloads are accessible by so many devices out of the box. But, that advantage depends on you already being an Apple customer.

In the end, if YouTube does go this route, Apple will likely have to shake things up to stay truly competitive. Renting via YouTube would just make things too easy, especially now that some TVs have YouTube browsing built-in. Apple TV always needed a shakeup. Hopefully this just lights a fire under Cupertino.